Swati borrowed Rs. 40960 from a bank to buy a piece of land. If the bank charges 12% per annum, compounded half-yearly, what amount will she have to pay after 1years? Also, find the interest paid by her.

Present value, P = Rs.40960


Interest rate, R = (25/2)% per annum


Time, n = 3/2 years


∵ Compounded half-yearly.


∴ Amount (A) = P [1 + (R/2)/100]2n [Where, P = Present value


R = Annual interest rate


n = Time in years]


∴ A = 40960 [1 + (25/4)/100]3 [R = 25/2 and n = 3/2 years]


⇒ A = 40960 [1 + 1/16]3


⇒ A = 40960 [17/16]3


⇒ A = 40960 × 4913/4096


⇒ A = 10 × 4913


⇒ A = 49130


∴ Amount = Rs.49130


∴ Compound interest = Rs.(49130 – 40960) [∵CI = A – P]


= Rs.8170


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